Credit Cards in the Per Diem Biz

Accepting credit cards is very helpful in the per diem business. It is very easy to set up. You do not need a card swiping machine, you only need an internet connection. I do it through Quickbooks, but any bank can set this up for you. I like it for two main situations:

1. You can smoke out the really bad apples. Anyone who does per diem work knows that sometimes you get shaky payers. It's the exception, but it happens. The way I use credit cards is, after someone is 60-90 days behind, I call and ask if there's a problem. I always ask first if there was a problem with our work, because I want to know if that's the reason for the non-payment. If there seems to be some financial issue, I will offer the option of making a credit card payment for all or part of the balance. Sometimes they are pleasantly surprised and they pay in full. Sometimes they make a partial payment and agree to allow a monthly credit card payment. Sometimes they don't accept any aspect of credit card paying, and then they have been smoked out. Here's my reasoning.....I don't believe there is any lawyer who doesn't have a credit card. If the lawyer doesn't "trust me" to handle the transaction honestly, then why should I trust the lawyer by extending credit? If the lawyer doesn't want to "pay interest" on his credit card debt, why should I be giving an interest free loan? The credit card offer is a really effective way for me to cut my losses on bad payers. You might say "But you might lose the client", to which I say "Let someone else make the interest free loans".

2. Depositions: I generally make a small profit on depositions. I subcontract them out, and I disclose that I am doing this. If I charge $250 for a job, I pay $175 and make $75. I consider this fair for handling the transaction. Unfortunately, attorneys tend to pay slowly on depositions, placing me in the position of paying my subcontractor and chasing the money for my small profit. This was happening so often that it made depositions a money LOSER. My new policy is depositions are taken on credit card guarantee only (except for a few "A" rated clients). Guess what? My volume of depositions is WAY down. However, due to 100% collectability, profits are up. Credit cards transformed this from the most dreaded appearance into one of the most desireable. I actually am inclined to make my deposition fees the most competitive possible, because I have taken the collectability risk out of the equation. This is well worth the 3% or so that the credit cards charge.